This is the third of a four-part series exploring how to navigate the complex landscape of Medicaid eligibility effectively.
Applying for Medicaid can be a daunting task. What makes it even more challenging are the rampant misconceptions about Medicaid eligibility, which create confusion and, in some instances, can discourage families from getting the care their loved one truly needs.
We sat down with Rehab Select’s Medicaid expert Karen Golson to clear things up. For instance, you might be wondering if there are exceptions to the income limit for eligibility, whether you can give money to your children, or whether your privacy is at stake when you apply for Medicaid. With over two decades of experience working for Medicaid, Golson understands precisely which misconceptions need to be debunked.
Gaining clarity is the first step. Let’s get started.
Myth #1 – Medicaid can access your personal financial records.
Answer: True and false. Medicaid can’t access your personal bank statements, but the agency does have a way to obtaining information about your finances. Medicaid has an asset verification system that uses the client or spouse’s Social Security number to pull information on any bank account they have had in the past five years, including the balance.
Medicaid will request that the client verify the balance on each account. If the client does not verify the information, then Medicaid will use the balance obtained from the asset verification system to determine eligibility. If the asset verification system finds that your loved one has $20,000 in a bank account, then it will use that number unless you can verify that it’s different.
Medicaid also conducts property checks using deeds, which are public records. The agency will inform you about any properties they have found through the property check.
Myth #2 – You can easily withhold information from Medicaid.
Answer: False. It’s never a good idea to withhold information from Medicaid because the agency has ways to verify your income and assets. Withholding information is one of the most common reasons for a denial of benefits.
People often feel like they have to be “broke” in order to qualify for Medicaid. This leads some people to withhold information from Medicaid for a variety of reasons. They may be trying to protect the money they worked for so that they can leave something for their children or grandchildren or leave enough money for the family to spend on daily expenses. They may have a mortgage that they have to pay. For some people, an obscure source of income may simply slip their mind. Others are dishonest for their own gain.
In Alabama, the funding for Medicaid is more limited because the state has not opted into the Affordable Care Act and doesn’t have other ways to raise funding such as a lottery system. Limited funding means it’s tougher to get on Medicaid in Alabama, but patients don’t have to relinquish everything they own.
Myth #3 – If your loved one has more than $2,382 of income per month (Alabama limit), they will not qualify for Medicaid.
Answer: False. It is possible for the client that has more than the Alabama limit for income to qualify for Medicaid. This is because the client can put their income into a qualifying income trust. The QIT is an irrevocable trust into which nursing home Medicaid recipients can deposit their income. It’s important to note that the QIT is only for income. Other resources such as CDs or IRAs can’t be put into the trust. Any income must also be deposited into the trust the month that it’s received. Common sources of income for nursing home Medicaid recipients include:
- Private pensions
- Federal employee pensions
- Military pensions
- Social Security lump sum payments
- Annual lump sums (e.g., widows)
- VA lump sum payments
- United Mine Workers
- Black lung payments
The money in the QIT can’t be taken out for any reason other than medical bills and care costs. If the recipient passes away, any funds in the account are due to the State of Alabama.
Myth #4 – All of your assets will always be counted to determine eligibility.
Answer: False. You can set up an Alabama family trust, which is an irrevocable trust governed by a commission. Assets you put into the Alabama family trust are no longer a countable resource. Of course, there are conditions of the trust. When a person is still on Medicaid, the commission will determine how they can and cannot spend their money. Generally, it must be anything that is legitimately for their care or something they previously paid for. The Medicaid client can pay for their mortgage with the funds from the trust or things for their care such as dentures, prescriptions, or eyeglasses. They must also provide documentation of the expense incurred in order to withdraw funds.
When the trust is terminated, either because the person has left the nursing home or passed away, Medicaid is allowed to seek some form of reimbursement. Any money left in the account will go to the beneficiaries.
Myth #5 – The recipient can’t transfer any assets to children without a penalty.
Answer: False. There are some people who may try to give away money shortly before they enter a nursing home in order to qualify for Medicaid. However, Medicaid has a five year look back period in which they try to determine whether the client has given away an asset for less than it’s worth. Not every asset that’s given away up to five years before the client applies for Medicaid will be penalized.
It’s all about the intent of the gift. If the client can explain the situation to Medicaid or the court and it follows the prudent person principle, then it may not be subject to a transfer penalty. Medicaid is not seeking to penalize any client for giving genuine gifts to their children or grandchildren. Giving your son that lives with you $1000/month for five years prior to your application may be a reasonable transfer of assets that’s not an action taken to qualify for Medicaid. On the other hand, giving your son $100,000 two days before you enter the nursing would be more subject to scrutiny.
We hope this brief guide has cleared up some of the confusion you may have when you first start a Medicaid application. There is so much faulty information floating around about Medicaid, so it’s important to get advice from experts. To learn more about how Rehab Select’s resident Medicaid expert can help you sort out the details, contact us here. Navigating Medicaid eligibility doesn’t have to be overwhelming — we are here to guide you through the steps.